Radio Controls Its Own On-Air Delivery, But Relies on Others for Online Carriage
A familiar theme in this column has been broadcasting’s tradition of providing both content creation and delivery. This is a nearly unique condition in the new media world, where most players engage in either one process or the other, not both.
Thus in the non-broadcast media space – primarily the online world today – content creation and content delivery are each handled by separate companies. This has established a schism in which content creators and service providers operate in different industry sectors and often find themselves at odds with each other.
Broadcasters, on the other hand, have enjoyed the benefits of holding two cards of different suits from the media deck, while their new competitors are only dealt one. The challenge for broadcasters is to know how to play these cards in the ongoing high-stakes media game. Competing against two types of operators, each of which may be well-honed in its particular space, requires broadcasters to act as if they are operating two separate businesses – one creating media content, the other delivering it.
For legacy broadcast services, both elements continue to work together, with on-air transmission services delivering a broadcaster’s own content streams. But broadcasters need not be locked into this single mode, and they should evaluate the option of having third-party delivery systems carry content to other audiences they cannot reach – or in modes they cannot provide – with their own delivery systems.
Of course, this is already taking place. For example, while broadcasters continue to manage their own transmitters, they don’t have to operate the infrastructure that delivers their content via the Internet. As a result, an online service provider can deliver a broadcaster’s content to audiences beyond the reach of their transmitters, or in an on-demand fashion, thereby potentially adding significant value to their service without significant capital investment and maintenance expense on the broadcaster’s part.
Conversely, broadcasters can operate as delivery companies, carrying content provided by others to the broadcast service area. This, too, has been underway for some time with subcarrier services and the like, but it is also an important part the promise of datacasting, where broadcasters can combine data services from third parties into a packetized stream they radiate in a uniform, unidirectional and inexpensive manner to a broad but regionally targeted audience.
Radio stands apart
In recent years, the television broadcasting industry has moved away from this model, as TV stations become much more important as content providers than delivery services.
Yes, TV stations still operate their transmitters – in fact, two of them in most cases today (one analog and one digital) – at non-negligible expense due to their high-powered nature. Yet the majority of the U.S. television audience receives these local stations’ signals via other delivery systems (cable and satellite TV combine to reach at least 85 percent of U.S. homes). Meanwhile, these delivery operators create little of their own content, acting simply as aggregators of national and local content streams provided by external companies, with whom they have negotiated carriage deals.
Thus radio is becoming the last “dual-mode” medium, where broadcasters are both creators and the primary deliverers of their programming. (Interestingly, this is also true for satellite radio, which – unlike satellite TV – for the most part also creates its own content streams, rather than aggregating channels created by other entities.)
So the discipline of acting as two different companies becomes increasingly important for radio operators, if they are to retain the agility required to compete in the ever-more-competitive new media environment.
The network strikes back
The business of having others deliver broadcasters content has not always been a smooth process, as TV stations have learned in their negotiations with cable and satellite TV operators for carriage.
On many of these arguments the FCC and other local regulators have had to play referee and put regulations in place to keep the playing field as level as possible.
Thankfully for radio broadcasters, the service environment where most of their new services live is the Internet, which has been largely free of such assertive gatekeeping. Yes, the record industry has staked its claim on a greater revenue share from radio for the broadcast of music online than they traditionally received for on air use, but in terms of physical delivery service, the hosting and bandwidth that broadcasters purchase for online transport of their content is simply a factor of how much they have wanted to spend, in what has become essentially a commodity marketplace.
But this may be about to change. The operators of the physical networks that carry these services are beginning to realize that as broadcasters and others add value to their own services via these networks, the netops are losing ground. Demand for bandwidth continues to increase, which adds capital and maintenance cost for the network operators. Meanwhile, much of the new revenue that flows into the environment as a result of increased content-carriage potential goes to the content providers, not the service operators.
This is particularly obvious in the case of VoIP (or Internet telephony), where, for example, new broadband Internet access provided by a telephone company’s DSL service is allowing consumers to actually reduce their net revenues paid to the telco, as consumers replace their use of traditional switched telephony service with VoIP service for their dial-up voice calls.
So it’s not surprising that network operators are considering a different approach. Telcos have been rattling their sabers of late with calls for regulatory adjustments that would allow them to charge premiums to certain customers on their Internet service networks, in return for tiered qualities of service (QoS).
For example, for a price, a netop could offer one Web site the ability to load faster than its competitor. Or, closer to home, the netop could guarantee a given minimum bitrate to a streaming media provider so that its services would maintain a higher and more stable level of quality than its competitors.
The ongoing deployment of IPv6 technology makes this QoS-throttling easier, so these moves toward “prioritization,” as it is being called, are not idle threats from telcos. But an equally vocal counter-volley has been launched by others, under the mantle of “network neutrality.” They cite the tradition of openness on the Internet as unassailable and a key component of its success in attracting strong consumer adoption.
While the telcos spin this as a feature providing certain of their customers with premium services, just as other businesses do, the net-neutrality camp is looking at the glass as half-empty, and interpreting it as disadvantaging those “premium” customers’ competitors. The latter group also worries that some of these same telcos have plans to launch new media services and partnerships of their own, and might use prioritization to provide advantages to such services.
Wireless broadband services could also be subject to this or perhaps even greater control by service providers, and given their mobility, these may have particular competitive impact on radio broadcasters’ prospects.
The net-neutrality battle is becoming a key front in the telecom reform process, which has begun in Washington and will likely continue for some time. Broadcasters who consider online services important to their future should take heed and follow this issue as it wends it way through the halls of Capitol Hill.